July 12, 2013 F I N A N C I A L R E S U L T S 2Q13
July 12, 2013
F I N A N C I A L R E S U L T S
2Q13
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2Q13 Financial highlights
1 See note 1 on slide 22 2 Assumes a tax rate of 38% 3 See note 4 on slide 22 and the Basel I Tier 1 capital ratio on page 39 of the Firm’s 2Q13 earnings release financial supplement 4 Final Basel III capital rules issued July 2, 2013 5 Final Basel 2.5 rules and Basel III Advanced NPR
2Q13 net income of $6.5B; EPS of $1.60; revenue of $26.0B1
Strong performance across our businesses
2Q13 results included the following significant items
Fortress balance sheet strengthened
Basel I Tier 1 common of $147B; ratio of 10.4%3
Estimated Basel III Tier 1 common of $148B; ratio of 9.3%, including the impact of
final rules4
– Based on NPR5, Basel III Tier 1 common ratio of 9.1%
$mm, excluding EPS
Pretax Net income2
EPS2
Real Estate Portfolios – Benefit from reduced mortgage loan loss reserves $950 $589 $0.15
Card Services – Benefit from reduced credit card loan loss reserves 550 341 0.09
Corporate – Expense for additional litigation reserves (600) (372) (0.09)
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2Q13 Financial results1
1 See note 1 on slide 22 2 Actual numbers for all periods, not over/under 3 See note 3 on slide 22
$mm, excluding EPS
$ O/(U)
2Q13 1Q13 2Q12
Revenue (FTE)1 $25,958 $110 $3,066
Credit costs 47 (570) (167)
Expense 15,866 443 900
Reported net income $6,496 ($33) $1,536
Net income applicable to common stock $6,101 ($30) $1,467
Reported EPS $1.60 $0.01 $0.39
ROE2 13% 13% 11%
ROTCE2,3 17 17 15
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Basel III Tier 1 common Ratio RWA ($B)
1Q13 8.9% $1,654
Capital generation 25 bps
AOCI (20) bps
Reduction in RWA 20 bps
2Q13 based on NPR2 9.1% $1,614
Impact of f inal rules 20 bps
2Q13 with final rules2 9.3% $1,587
Fortress balance sheet and returns
U.S. Basel III capital rules finalized and largely consistent with expectations
~20bps improvement in our B3T1C ratio primarily from revised treatment of MSRs and securitizations under Advanced approach
Estimated LCR ratio of 118%; HQLA6 of $454B
Available resources7 to Basel III RWA of ~19%
2Q13 common stock dividend increased to $0.38 per share
Of the $6B authorized through 1Q14, repurchased $1.2B of common equity in 2Q13
Firmwide total credit reserves of $20.1B; loan loss coverage ratio of 2.06%8
1 See note 4 on slide 22 and the Basel I Tier 1 capital and Tier 1 capital ratio on page 39 of the Firm’s 2Q13 earnings release financial supplement 2 Basel I reflects the impact of final Basel 2.5 rules effective 1Q13, which resulted in additional capital requirements for trading positions and securitizations; Basel III estimate reflects the impact of final Basel 2.5 rules; final Basel III capital rules issued July 2, 2013 3 See note 3 on slide 22 4 Return on Basel I RWA, excluding DVA, a non-GAAP financial measure, was 1.8%, 1.9% and 1.4% for 2Q13, 1Q13 and 2Q12, respectively 5 Tangible book value per share is a non-GAAP financial measure. Tangible book value per share represents the Firm's tangible common equity divided by period-end common shares 6 High Quality Liquid Assets (“HQLA”) is the estimated amount of assets the Firm believes will qualify for inclusion in the Liquidity Coverage Ratio (“LCR”) based on the Firm’s current understanding of the proposed rules 7 Available resources include Basel III Tier 1 Common equity, preferred and trust preferred securities, as well as holding company unsecured long-term debt with remaining maturities greater than 1 year 8 See note 2 on slide 22
Note: estimated for 2Q13
2Q13 1Q13 2Q12
Basel I Tier 1 common capital1,2 $147 $143 $130
Basel I Risk-weighted assets2 1,414 1,407 1,319
Basel I Tier 1 common ratio1,2 10.4% 10.2% 9.9%
Basel III Tier 1 common capital2
$148 $146 $132
Basel III Risk-weighted assets (including final rules)2
1,587 ― ―
Basel III Tier 1 common ratio (including final rules)2
9.3% ― ―
Total assets (EOP) $2,440 $2,389 $2,290
Return on equity 13% 13% 11%
Return on tangible common equity3 17 17 15
Return on assets 1.09 1.14 0.88
Return on Basel I Risk-weighted assets4 1.8 1.9 1.5
Tangible book value per share5 $40.04 $39.54 $35.71
$B, except where noted
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JPM’s estimated Basel III leverage ratio based on July 2013 proposed U.S. leverage rule is 4.7% compared to Holding Company
requirement of 5.0%
Leverage ratio update
1 High Quality Liquid Assets (“HQLA”) is the estimated amount of assets the Firm believes will qualify for inclusion in the Liquidity Coverage Ratio (“LCR”) based on the Firm’s current understanding of the proposed rules 2 Reflects Bloomberg average of analysts’ estimates for net income as of July 9, 2013 net of annual preferred dividends of ~$800mm and common dividends at $0.38/share; assumes $6-8B annual share repurchases
generally consistent with 2013 CCAR approval
60bps improvement from net capital generation
(holding capital distributions flat) through end of 2014
~0-100bps improvement from optimizing Tier 1
capital and balance sheet over time
Holding Company can be compliant by 1Q15; bank
compliance will follow
Timeline subject to revision if significant rule
changes are made to denominator
Balance sheet actions may include
Reprice/restructure certain commitments and/or
unwind derivative positions
Limit non-operational wholesale deposits
Optimize use of central clearing
Incent business unit and entity level efficiencies
Over time
2Q13
Actual 2H132 20142
Analysts' estimated net income ($B) ~$12 ~$23$155 $168
Basel III Tier 1 common ratio (%) 9.3% ≥ 9.5% ≤ 11.0%
Cumulative impacts to leverage ratio (bps)
Capital generation ~20bps ~60bps
Tier 1 capital actions ~0-30bps
Leverage asset actions ~0-70bps
Total leverage ratio impact ~60-160bps
Illustrative JPM capital generation – based on analysts' estimates
Although compliance will not be without impact, it is manageable
~2x
B3 RWA
Balance sheet view Proposed U.S. rule add-ons Leverage exposure Potential further add-ons per Basel proposal
U.S. GAAP assets $2.4T
Includes:
Cash $279B
Other $175B
Sold credit protection
Matched securities financing netting
Additional derivatives collateral disallowed
Unfunded commitments
+ < $3.5T
Derivatives future exposureHQLA1
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Consumer & Community Banking1
Consumer & Business Banking
#1 ATM network3
#2 in branches3
#1 most visited banking portal – Chase.com4
#1 in customer satisfaction among the largest banks by both J.D.
Power5 and the American Customer Satisfaction Index
$172B client investment assets; nearly 1,700 Chase Private Client
locations and 165K+ CPC clients
Mortgage Banking
#2 mortgage originator6
#2 retail mortgage originator6
#3 mortgage servicer6
#1 in customer satisfaction among the largest banks for
originations and servicing by J.D. Power7
Card, Merchant Services & Auto
#1 credit card issuer in the U.S. based on loans outstanding8
#1 global Visa issuer based on consumer and business credit
card sales volume9
#1 U.S. co-brand credit card issuer8
#2 wholly-owned merchant acquirer10
#3 non-captive auto lender11
Leadership positions
1 See note 1 on slide 22
2 Actual numbers for all periods, not over/under 3 Based on disclosures by peers as of 1Q13 4 Per compete.com as of May 2013 5 Chase ranked #4 by J.D. Power for customer satisfaction in retail banking among large bank peers
6 Based on Inside Mortgage Finance as of 1Q13 7 Chase ranked #4 for customer satisfaction in originations and #4 in servicing on an overall basis 8 Based on disclosures by peers and internal estimates as of 1Q13 9 Based on Visa data as of 1Q13 10 Based on Nilson Report ranking of largest merchant acquirers for 2012 11 Per Autocount data for May 2013 YTD
$mm
$ O/(U)
2Q13 1Q13 2Q12
Net interest income $7,094 ($115) ($67)
Noninterest revenue 4,921 515 (368)
Revenue $12,015 $400 ($435)
Expense 6,864 74 27
Credit costs (19) (568) (198)
Net income $3,089 $503 ($193)
Key drivers/statistics2
EOP Equity ($B) $46.0 $46.0 $43.0
ROE 27% 23% 31%
Overhead ratio 57 58 55
Average loans ($B) $411.1 $418.3 $429.3
Average deposits ($B) 453.6 441.3 411.3
Number of branches 5,657 5,632 5,563
Number of ATMs 19,075 18,830 18,132
Active online customers (000's) 32,245 32,281 30,361
Active mobile customers (000's) 14,013 13,263 10,646
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Consumer & Community Banking
Consumer & Business Banking
1 Actual numbers for all periods, not over/under 2 Includes checking accounts and Chase LiquidSM cards
Consumer & Business Banking net income of $698mm,
down 25% YoY, but up 9% QoQ
Net revenue of $4.3B, down 1% YoY, but up 3% QoQ
Expense up 10% YoY, primarily driven by investments
and certain adjustments in the prior year, but flat QoQ
Average total deposits of $432.8B, up 11% YoY and 3%
QoQ
Deposit margin of 2.31%, down 31 bps YoY and 5 bps
QoQ
Accounts2 up 6% YoY and 1% QoQ, reflecting
historically low customer attrition
Business Banking loan originations down 26% YoY and
up 7% QoQ
Average Business Banking loans up 4% YoY and flat
QoQ
Investment sales up 53% YoY and 3% QoQ
Client investment assets up 16% YoY and 2% QoQ
Financial performance
Key drivers
$mm
$ O/(U)
2Q13 1Q13 2Q12
Net interest income $2,614 $42 ($47)
Noninterest revenue 1,673 68 18
Revenue $4,287 $110 ($29)
Expense 3,042 1 285
Credit costs 74 13 76
Net income $698 $57 ($233)
Key drivers/statistics1 ($B)
EOP Equity $11.0 $11.0 $9.0
ROE 25% 24% 42%
Average total deposits $432.8 $421.1 $389.6
Deposit margin 2.31% 2.36% 2.62%
Accounts2 (mm) 28.9 28.5 27.4
Business Banking loan originations $1.3 $1.2 $1.8
Business Banking loan balances (Avg) 18.7 18.7 17.9
Investment sales 9.5 9.2 6.2
Client investment assets (EOP) 171.9 168.5 147.6
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Consumer & Community Banking
Mortgage Banking
Mortgage Production pretax income of $582mm, down
$349mm YoY, reflecting lower margins and higher expense,
partially offset by higher volumes and lower repurchase
losses
Realized repurchase losses of $169mm
Reduction of repurchase liability of $185mm
Net servicing-related revenue of $770mm, down 2% YoY
Mortgage Servicing expense down $238mm YoY
MSR risk management income of $78mm, down $155mm
YoY
Real Estate Portfolios pretax income of $1.2B, down $16mm
YoY
Total net revenue of $908mm, down 13% YoY, driven by
a decline in net interest income resulting from portfolio
runoff
Credit cost benefit of $662mm
– Net charge-offs of $288mm
– Reduction in allowance for loan losses of $950mm
Mortgage originations of $49.0B, up 12% YoY and down 7%
QoQ
Purchase originations of $17.4B, up 50% YoY and 44%
QoQ
1 Includes the provision for credit losses associated with Mortgage Production 2 Actual numbers for all periods, not over/under 3 Firmwide mortgage origination volume was $52.0B, $55.1B and $46.0B for 2Q13, 1Q13 and 2Q12,
respectively 4 Real Estate Portfolios only
5 Excludes the impact of purchased credit-impaired loans acquired as part of the WaMu transaction. The
allowance for loan losses was $5.7B for these loans at the end of 2Q13,1Q13 and 2Q12. To date, no
charge-offs have been recorded for these loans
Financial performance $mm
$ O/(U)
2Q13 1Q13 2Q12
Mortgage Production
Production-related revenue, excl. repurchase losses $1,286 $68 ($275)
Production expense1 720 10 100
Income, excl. repurchase losses $566 $58 ($375)
Repurchase (losses)/benefit 16 97 26
Income before income tax expense $582 $155 ($349)
Mortgage Servicing
Net servicing-related revenue $770 ($8) ($15)
Default servicing expense 475 (22) (230)
Core servicing expense 240 – (8)
Servicing expense $715 ($22) ($238)
Income/(loss), excl. MSR risk management 55 14 223
MSR risk management 78 220 (155)
Income before income tax expense $133 $234 $68
Real Estate Portfolios
Revenue $908 ($37) ($132)
Expense 404 41 (8)
Net charge-offs 288 (160) (408)
Change in allowance (950) (300) 300
Credit costs ($662) ($460) ($108)
Income before income tax expense $1,166 $382 ($16)
Mortgage Banking net income $1,142 $469 ($179)
Key drivers/statistics ($B)2
EOP Equity $19.5 $19.5 $17.5
ROE 23% 14% 30%
Mortgage originations3 $49.0 $52.7 $43.9
EOP third-party mortgage loans serviced 832.0 849.2 860.0
EOP NCI owned portfolio4 114.6 115.4 124.5
ALL/EOP loans4,5 2.85% 3.66% 5.20%
Net charge-off rate4,5 1.00 1.56 2.21
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Net income of $1.2B, up 21% YoY
Net income, excluding the reduction in the allowance for
loan losses3, up 61% YoY
Revenue of $4.7B, up 3% YoY
Credit costs of $564mm, down 23% YoY
Expense of $2.0B, down 5% YoY, primarily driven by lower
remediation expense related to an exited non-core product
1 Actual numbers for all periods, not over/under 2 Excludes Commercial Card 3 See note 5 on slide 22
Card Services
Average loans of $122.9B, down 2% YoY and 1% QoQ
Record sales volume2 of $105.2B, up 10% YoY and 11%
QoQ
Net charge-off rate3 of 3.31%, down from 4.32% in the prior
year and down from 3.55% in the prior quarter
Merchant Services
Merchant processing volume of $185.0B, up 15% YoY and
5% QoQ
Transaction volume of 8.8B, up 24% YoY and 6% QoQ
Auto
Average loans up 5% YoY and 1% QoQ
Originations up 17% YoY and 5% QoQ
Consumer & Community Banking
Card, Merchant Services & Auto
$mm Financial performance
Key drivers
2Q13 1Q13 2Q12
Revenue $4,670 ($50) $145
Expense 1,988 45 (108)
Net charge-offs 1,114 (72) (371)
Change in allowance (550) (50) 201
Credit costs $564 ($122) ($170)
Net income $1,249 ($23) $219
EOP Equity1 $15.5 $15.5 $16.5
ROE1 32% 33% 25%
Card Services – Key drivers/statistics ($B)1
Average loans $122.9 $123.6 $125.2
Sales volume2 105.2 94.7 96.0
Net revenue rate 12.59% 12.83% 11.91%
Net charge-off rate3 3.31 3.55 4.32
30+ day delinquency rate3 1.69 1.94 2.13
# of accounts with sales activity (mm)2 30.0 29.4 29.3
% of accounts acquired online2 53% 52% 49%
Merchant Services – Key drivers/statistics ($B)1
Merchant processing volume $185.0 $175.8 $160.2
# of total transactions 8.8 8.3 7.1
Auto – Key drivers/statistics ($B)1
Average loans $50.7 $50.0 $48.3
Originations 6.8 6.5 5.8
$ O/(U)
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Corporate & Investment Bank1
Net income of $2.8B on revenue of $9.9B
DVA gain of $355mm
ROE of 20%; 19% excl. DVA
Banking
IB fees of $1.7B, up 38% YoY, primarily driven by strong
debt and equity underwriting
– Ranked #1 in YTD Global IB fees
Treasury Services revenue of $1.1B, down 2% YoY
Lending revenue of $373mm, primarily driven by NII on
retained loans and fees on lending-related commitments
Markets & Investor Services
Markets revenue of $5.4B, up 18% YoY, reflecting solid
client revenue and improved performance in credit-related
and equities products
Securities Services revenue of $1.1B, up 1% YoY
Credit Adjustments & Other of $274mm, predominantly
driven by DVA
Expense of $5.7B, up 8% YoY, primarily driven by higher
compensation expense on higher revenue
2Q13 comp/revenue, excl. DVA, of 31%
Financial performance
1 See notes 1 and 7 on slide 22
2 Lending revenue includes net interest income, fees, gains or losses on loan sale activity, gains or losses on securities received as
part of a loan restructuring, and the risk management results related to the credit portfolio (excluding trade finance) 3 Credit adjustments & Other primarily includes net credit portfolio credit valuation adjustments (“CVA”) and associated hedging
activities; DVA related to both structured notes and derivatives; and nonperforming derivative receivable results effective in 1Q12
and thereafter 4 Actual numbers for all periods, not over/under 5 Return on equity excluding DVA, a non-GAAP financial measure, was 19%, 18% and 16%, for 2Q13, 1Q13 and 2Q12, respectively 6 Compensation expense as a percentage of total net revenue excluding DVA, a non-GAAP financial measure, was 31%, 34%, and
33%, for 2Q13, 1Q13 and 2Q12, respectively 7 ALL/EOP loans as reported was 1.21%, 1.11% and 1.31% for 2Q13, 1Q13 and 2Q12, respectively
$mm
$ O/(U)
2Q13 1Q13 2Q12
Corporate & Investment Bank revenue $9,876 ($264) $890
Investment banking fees 1,717 284 472
Treasury Services 1,051 7 (23)
Lending2 373 (125) 3
Total Banking $3,141 $166 $452
Fixed Income Markets 4,078 (674) 585
Equity Markets 1,296 (44) 253
Securities Services 1,087 113 9
Credit Adjustments & Other3 274 175 (409)
Total Markets & Investor Services $6,735 ($430) $438
Credit costs (6) (17) (35)
Expense 5,742 (369) 449
Net income $2,838 $228 $462
Key drivers/statistics ($B)4
EOP equity $56.5 $56.5 $47.5
ROE5 20% 19% 20%
Overhead ratio 58 60 59
Comp/revenue6 30 33 30
EOP loans $110.8 $117.5 $117.0
Average client deposits 369.1 357.3 348.1
Assets under custody ($T) 18.9 19.3 17.7
ALL/EOP loans ex-conduits and trade7 2.35% 2.17% 2.75%
Net charge-off/(recovery) rate (0.31) 0.07 (0.04)
Average VaR ($mm) $40 $62 $75
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Corporate & Investment Bank – Key metrics & leadership positions
Comments
Corporate & Investment Bank
48% of revenue is international for 1H13; 49% excl. DVA
International deposits increased 38% from FY2010, driven by growth
across regions
International loans up 54% since FY2010
Strategic Re-engineering Program ~80% complete
Banking
Improved ranking to #2 in Global Equity & Equity-related in 1H13 from #4 in
FY2012
#1 in combined Fedwire and CHIPS volume4, Federal Reserve, 2002–2013
2Q13 total international electronic funds transfer volume up 4% from 2Q12
Markets & Investor Services
#1 Fixed income markets revenue share of top 10 investment banks5
International AUC up 31% from FY2010; represents 44% of 2Q13 total
AUC
JPM ranked #1 for FY2012, FY2011 and FY2010 for both All-America
Fixed Income Research and Equity Research
Note: Rankings included as available 1 International client deposits and other third party liabilities 2 Includes TS product revenue reported in other LOBs related to customers who are also customers of those LOBs 3 International electronic funds transfer represents volume over the period and includes non-U.S. dollar Automated Clearing House ("ACH") and clearing volume 4 1Q13 volume 5 1Q13 rank of JPM Fixed Income Markets revenue of 10 leading competitors based on reported information, excluding DVA
Corporate & Investment Bank
Banking
Markets & Investor Services
($B) 1H13 FY2012 FY2011 FY2010
International revenue $9.7 $16.3 $17.1 $15.7
International deposits (Avg)1 202.5 189.6 180.1 146.4
International loans (EOP) 69.7 67.7 67.0 45.3
Gross CIB revenue from CB 1.9 4.0 3.7 4.0
Global IB fees (Dealogic) #1 #1 #1 #1
TS firmwide revenue2 $3.4 $6.9 $6.4 $6.6
Combined Fedwire/CHIPS volume #1 #1 #1 #1
International electronic funds
transfer volume (mm)3 154.0 304.8 250.5 232.5
International AUC ($T, EOP) $8.3 $8.3 $7.1 $6.3
All-America Institutional Investor
research rankings
#1 #1 #1
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Commercial Banking1
Net income of $621mm, down 8% YoY and up 4% QoQ
Revenue of $1.7B, up 2% YoY
EOP loan balances up 9% YoY4; Middle Market loans up
10% YoY4
Average client deposits of $195.2B, flat YoY
Credit costs of $44mm
Net charge-off rate of 0.03%
Excluding recoveries, charge-off rate of 0.08%
Expense of $652mm, flat QoQ
Overhead ratio of 38%
1 See notes 1 and 8 on slide 22 2 Effective January 1, 2013, financial results for financial institution clients was transferred into
Corporate Client Banking from Middle Market Banking 3 Actual numbers for all periods, not over/under 4 Effective January 1, 2013, whole loan financing agreements, previously reported as other assets,
were reclassified as loans. For the quarters ended June 30, 2013 and March 31, 2013, the impact on
period-end loans was $2.1 billion and $1.7 billion, respectively and the impact on average loans was
$1.8 billion and $1.6 billion, respectively 5 Loans held-for-sale and loans at fair value were excluded when calculating the loan loss coverage
ratio and net charge-off/(recovery) rate
$mm
2Q13 1Q13 2Q12
Revenue $1,728 $55 $37
Middle Market Banking2 777 24 37
Corporate Client Banking2 444 11 8
Commercial Term Lending 315 24 24
Real Estate Banking 113 1 (1)
Other 79 (5) (31)
Credit costs $44 $5 $61
Expense 652 8 61
Net income $621 $25 ($52)
Key drivers/statistics ($B)3
EOP equity $13.5 $13.5 $9.5
ROE 18% 18% 28%
Overhead ratio 38 38 35
Average loans4 $131.6 $129.3 $118.4
EOP loans4 130.9 130.4 120.5
Average client deposits 195.2 196.0 193.3
Allowance for loan losses 2.7 2.7 2.6
Nonaccrual loans 0.5 0.7 0.9
Net charge-off/(recovery) rate5 0.03% (0.02)% (0.03)%
ALL/loans5 2.06 2.05 2.20
$ O/(U)
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Asset Management1
1 See notes 1 and 8 on slide 22 2 Actual numbers for all periods, not over/under 3 See note 9 on slide 22
Net income of $500mm, up 28% YoY
Revenue of $2.7B, up 15% YoY
AUM of $1.5T, up 9% YoY
AUM net inflows for the quarter of $3B, driven by net
inflows of $25B to long-term products and net outflows
of $22B from liquidity products
Client assets of $2.2T, up 10% YoY and down 1% QoQ
Record EOP loan balances of $86.0B, up 22% YoY and
6% QoQ
Strong investment performance
76% of mutual fund AUM ranked in the 1st or 2nd
quartiles over 5 years
Expense up 11% YoY, primarily due to higher
performance-based compensation and headcount-
related expense1
$mm
2Q13 1Q13 2Q12
Revenue $2,725 $72 $361
Private Banking 1,483 37 142
Institutional 588 (1) 51
Retail 654 36 168
Credit costs $23 $2 ($11)
Expense 1,892 16 191
Net income $500 $13 $109
Key drivers/statistics ($B)2
EOP equity $9.0 $9.0 $7.0
ROE 22% 22% 22%
Pretax margin3 30 29 27
Assets under management (AUM) $1,470 $1,483 $1,347
Client assets 2,157 2,171 1,968
Average loans 83.6 80.0 67.1
EOP loans 86.0 81.4 70.5
Average deposits 136.6 139.4 128.1
$ O/(U)
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Private Equity
Private Equity net income was $212mm, primarily due to
net valuation gains on private investments
Private Equity portfolio of $8.0B
Treasury and CIO
Treasury and CIO net loss of $429mm
Negative NII of $558mm due to low rates and limited
reinvestment opportunities
Net securities gains of $123mm
Modest loss related to redemption of trust preferred
securities
Expect Treasury and CIO quarterly net loss of $300mm +/-;
likely to vary each quarter
Other Corporate
Noninterest expense includes additional litigation reserves
of ~$600mm (pretax)
Expect Other Corporate quarterly net income to be
$100mm +/-; likely to vary each quarter
1 See note 1 on slide 22
$mm
Corporate/Private Equity1
2Q13 1Q13 2Q12
Private Equity $212 $394 $15
Treasury and CIO (429) (453) 1,649
Other Corporate (335) (743) (454)
Net income/(loss) ($552) ($802) $1,210
$ O/(U)
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Firm NII is down modestly QoQ
Both firmwide and core NIM lower
(17 bps and 23 bps, respectively) QoQ primarily due to:
Increase in cash balance – $109B QoQ, or 18 bps of core NIM
Lower loan yields and Investment Securities yields
Partly offset by lower long-term debt yields
Core net interest margin1
Increase in cash balance primarily driven by
Deposit growth
Firm actions taken to accelerate LCR compliance
1 See note 6 on slide 22 2 The core and market-based NII presented for FY2010 and FY2011 represent their quarterly averages (e.g. total for the year divided by 4); the yield for all periods represent the annualized yield
3.67%
3.29% 3.10% 3.00% 2.92% 2.85% 2.83% 2.60%
1.51% 1.41% 1.29% 1.07% 1.11% 1.17% 1.14% 1.05%
3.06%
2.74% 2.61%
2.47% 2.43% 2.40% 2.37% 2.20%
FY2010 FY2011 1Q12 2Q12 3Q12 4Q12 1Q13 2Q13
Core NII Market-based NII Core NIM Market-based NIM JPM NIM
Net interest income trend
Comments
2 2
Average balances ($B)
Deposits with banks $48B $80B $111B $111B $127B $125B $157B $266B
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Outlook
Corporate/Private Equity
NIM & NII
Mortgage Banking
Total quarterly net charge-offs expected to be less than
$250mm in 3Q13
If charge-offs and delinquencies continue to trend down,
there will be continued reserve reductions
Realized repurchase losses may be offset by reserve
reductions based on current trends
If primary mortgage rates remain at or above current
levels, refinance volumes and margins will be under
pressure and Mortgage Production profitability will be
challenged
Card, Merchant Services & Auto
If portfolio performance continues to improve – including
delinquencies and restructured loans – potential for
incremental releases in the second half of 2013
Expect Treasury and CIO quarterly net loss of $300mm +/-;
likely to vary each quarter
Expect Other Corporate quarterly net income to be
$100mm +/-; likely to vary each quarter
Expect NIM relatively stable in the second half of 2013
Expect the Firm's NII to be modestly up in 3Q13 vs. 2Q131
Consumer & Community Banking
1 Replaces previous NII guidance
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Appendix
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Peripheral European exposure1
Securities and trading
Lending AFS
securities
Trading
Derivative collateral
Portfolio hedging
Net exposure
Spain $3.1 $0.4 $4.1 ($2.0) ($0.4) $5.2
Sovereign 0.0 0.4 (0.3) 0.0 (0.1) 0.0
Non-sovereign 3.1 0.0 4.4 (2.0) (0.3) 5.2
5 Italy $2.3 $0.0 $10.4 ($2.4) ($4.5) $5.8
Sovereign 0.0 0.0 8.3 (1.2) (4.0) 3.1
Non-sovereign 2.3 0.0 2.1 (1.2) (0.5) 2.7
Other (Ireland, Portugal,
and Greece) $0.9 $0.0 $3.7 ($1.3) ($0.2) $3.1
Sovereign 0.0 0.0 0.1 0.0 (0.1) 0.0
Non-sovereign 0.9 0.0 3.6 (1.3) (0.1) 3.1
Total firmwide exposure $6.3 $0.4 $18.2 ($5.7) ($5.1) $14.1
$14.1B total firmwide net exposure as of 2Q13, up from $12.3B as of 1Q13
During 2Q13, net exposure increased due to roll-off of tranched index positions
The impact of the roll-off was ~$4B increase in exposure
The Firm continues to be active with clients in the region
1 Exposure is a risk management view. Lending is net of liquid collateral. Trading includes net inventory, derivative netting under legally enforceable trading agreements, net
CDS underlying exposure from market-making flows, unsecured net derivative receivables and under-collateralized securities financing counterparty exposure
As of June 30, 2013 ($B)
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Consumer credit – Delinquency trends1
Note: Prime Mortgage excludes held-for-sale, Asset Management and Government Insured loans 1 Excluding purchased credit-impaired loans
2 Credit card delinquencies prior to January 1, 2010 included certain reclassification adjustments that assumed credit card loans securitized by Card Services remained on the balance sheet 3 “Payment holiday” in 2Q09 impacted delinquency trends in 3Q09
$0
$500
$1,000
$1,500
$2,000
$2,500
$3,000
$3,500
Sep-09 Feb-10 Jul-10 Dec-10 May-11 Oct-11 Mar-12 Aug-12 Jan-13 Jun-13 $0
$1,000
$2,000
$3,000
$4,000
Sep-09 Feb-10 Jul-10 Dec-10 May-11 Oct-11 Mar-12 Aug-12 Jan-13 Jun-13
$0
$500
$1,000
$1,500
$2,000
$2,500
$3,000
Sep-09 Feb-10 Jul-10 Dec-10 May-11 Oct-11 Mar-12 Aug-12 Jan-13 Jun-13 $500
$2,000
$3,500
$5,000
$6,500
$8,000
$9,500
$11,000
Sep-09 Feb-10 Jul-10 Dec-10 May-11 Oct-11 Mar-12 Aug-12 Jan-13 Jun-13
30+ day delinquencies 30-89 day delinquencies
30 – 149 day delinquencies 150+ day delinquencies 30 – 149 day delinquencies 150+ day delinquencies
30 – 149 day delinquencies 150+ day delinquencies
Home Equity delinquency trend ($mm) Prime Mortgage delinquency trend ($mm)
Subprime Mortgage delinquency trend ($mm) Credit card delinquency trend2,3 ($mm)
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Real Estate Portfolios and Card Services – Coverage ratios
Real Estate Portfolios and Card Services credit data ($mm)
1 2Q12 adjusted net charge-offs for Card Services were $1,254mm or 4.03%; excluding the effect of a change in charge-off policy for troubled debt restructurings, 2Q12 reported net charge-offs were $1,345mm or 4.32% 2 Net charge-offs annualized (NCOs are multiplied by 4)
3 See note 5 on slide 22
4 4Q10 adjusted net charge-offs exclude a one-time $632mm adjustment related to the timing of when the Firm recognizes charge-offs on delinquent loans 5 3Q12 adjusted net charge-offs and adjusted net charge-off rate for Real Estate Portfolios exclude the effect of an incremental $825mm of net charge-offs based on regulatory guidance
6 4Q12 adjusted net charge-offs and adjusted net charge-off rate reflect a full quarter of normalized Chapter 7 Bankruptcy discharge activity, which exclude one-time adjustments related to the adoption of Chapter 7
Bankruptcy discharge regulatory guidance
2,075
1,372 1,214 1,157 1,076 954 899 876 808 696 595 520 448 288
4,512
3,721
3,133
2,671 2,226
1,810 1,499 1,390 1,386 1,254 1,116 1,097 1,082 1,014
$0
$1,000
$2,000
$3,000
$4,000
$5,000
1Q10 2Q10 3Q10 4Q10 1Q11 2Q11 3Q11 4Q11 1Q12 2Q12 3Q12 4Q12 1Q13 2Q13
Real Estate Portfolios Card Services
NCOs ($mm)
4 1
5 6
O/(U)
Adjusted1
2Q13 1Q13 2Q12 2Q12
Real Estate Portfolios (NCI)
Net charge-offs $288 $448 $696 ($408)
NCO rate 1.00% 1.56% 2.21% (121)bps
Allowance for loan losses $3,268 $4,218 $6,468 ($3,200)
LLR/annualized NCOs2284% 235% 232%
Card Services
Net charge-offs $1,014 $1,082 $1,254 ($240)
NCO rate33.31% 3.55% 4.03% (72)bps
Allowance for loan losses $4,445 $4,998 $5,499 ($1,054)
LLR/annualized NCOs2110% 115% 110%
1
1
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Firmwide – Coverage ratios
$19.4B of loan loss reserves at June 30, 2013,
down ~$4.4B from $23.8B in the prior year,
reflecting improved portfolio credit quality
Loan loss coverage ratio of 2.06%1
$mm
1 See note 2 on slide 22 2 NPLs at 2Q13, 1Q13, 4Q12 and 3Q12 include $1.9B, $1.9B, $1.8B and $1.7B, respectively, in accordance with regulatory guidance requiring loans discharged under Chapter 7 bankruptcy and not
reaffirmed by the borrower, regardless of their delinquency status, to be reported as nonaccrual loans. In addition, the Firm’s policy is generally to exempt credit card loans from being placed on
nonaccrual status as permitted by regulatory guidance
2Q13 1Q13 2Q12
Consumer, ex. credit card
LLR/Total loans 2.16% 2.56% 3.47%
LLR/NPLs2 58 66 102
Credit Card
LLR/Total loans 3.58% 4.10% 4.41%
Wholesale
LLR/Total loans 1.38% 1.33% 1.46%
LLR/NPLs 424 332 241
Firmwide
LLR/Total loans 2.06% 2.27% 2.74%
LLR /NPLs (ex. credit card)296 98 127
LLR /NPLs2143 146 183
11,928 11,005 9,993 10,605 10,068 11,370 10,720 10,426 9,734
28,520 28,350
27,609
25,871 23,791
22,824 21,936
20,780 19,384
0.00%
1.00%
2.00%
3.00%
4.00%
5.00%
2Q11 3Q11 4Q11 1Q12 2Q12 3Q12 4Q12 1Q13 2Q13
0%
100%
200%
300%
400%
500%
Loan loss reserve Nonperforming loans Loan loss reserve/Total loans1 Loan loss reserve/NPLs1
2 2 2 2
JPM credit summary
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Source: Dealogic. Global Investment Banking fees reflects ranking of fees and market share. Remainder of
rankings reflects transaction volume rank and market share. Global announced M&A is based on
transaction value at announcement; because of joint M&A assignments, M&A market share of all
participants will add up to more than 100%. All other transaction volume-based rankings are based on
proceeds, with full credit to each book manager/equal if joint 1 Global Investment Banking fees rankings exclude money market, short-term debt and shelf deals 2 Long-term debt rankings include investment-grade, high-yield, supranational, sovereigns, agencies,
covered bonds, asset-backed securities (“ABS”) and mortgage-backed securities; and exclude money
market, short-term debt, and U.S. municipal securities 3 Global Equity and equity-related ranking includes rights offerings and Chinese A-Shares 4
Announced M&A reflects the removal of any withdrawn transactions. U.S. announced M&A represents any
U.S. involvement ranking
IB League Tables
For 1H13, JPM ranked:
#1 in Global IB fees
#1 in Global Debt, Equity & Equity-related
#1 in Global Long-term Debt
#2 in Global Equity & Equity-related; #1 in
Global Equity Wallet
#2 in Global M&A Announced
#1 in Global Loan Syndications
League table results
1H13 FY12
Rank Share Rank Share
Based on fees:
Global IB fees1 1 8.9% 1 7.5%
Based on volumes:
Global Debt, Equity & Equity-related 1 7.4% 1 7.2%
US Debt, Equity & Equity-related 1 11.7% 1 11.5%
Global Long-term Debt2 1 7.4% 1 7.1%
US Long-term Debt 1 11.9% 1 11.6%
Global Equity & Equity-related3 2 7.5% 4 7.8%
US Equity & Equity-related 3 11.6% 5 10.4%
Global M&A Announced4 2 24.3% 2 19.8%
US M&A Announced 1 37.6% 2 24.3%
Global Loan Syndications 1 10.0% 1 9.6%
US Loan Syndications 1 17.3% 1 17.6%
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Notes on non-GAAP financial measures 1. In addition to analyzing the Firm’s results on a reported basis, management reviews the Firm’s results and the results of the lines of business on a “managed” basis,
which is a non-GAAP financial measure. The Firm’s definition of managed basis starts with the reported U.S. GAAP results and includes certain reclassifications to present total net revenue for the Firm (and each of the business segments) on a fully taxable-equivalent (“FTE”) basis. Accordingly, revenue from investments that receive tax credits and tax-exempt securities is presented in the managed results on a basis comparable to taxable securities and investments. This non-GAAP financial measure allows management to assess the comparability of revenue arising from both taxable and tax-exempt sources. The corresponding income tax impact related to tax-exempt items is recorded within income tax expense. These adjustments have no impact on net income as reported by the Firm as a whole or by the lines of business.
2. The ratio of the allowance for loan losses to end-of-period loans excludes the following: loans accounted for at fair value and loans held-for-sale; purchased credit-impaired (“PCI”) loans; and the allowance for loan losses related to PCI loans. Additionally, Real Estate Portfolios net charge-off rates exclude the impact of PCI loans.
3. Tangible common equity (“TCE”) represents common stockholders’ equity (i.e., total stockholders’ equity less preferred stock) less goodwill and identifiable intangible assets (other than MSRs), net of related deferred tax liabilities. Return on tangible common equity measures the Firm’s earnings as a percentage of average TCE. Tangible book value per share represents the TCE divided by the period-end number of common shares. In management’s view, these measures are meaningful to the Firm, as well as to analysts and investors, in assessing the Firm’s use of equity and in facilitating comparisons with peers.
4. The Tier 1 common ratio under both Basel I and Basel III are both non-GAAP financial measures. These measures are used by management, bank regulators, investors and analysts to assess the Firm's capital position and to compare the Firm's capital to that of other financial services companies. The Basel I Tier 1 common ratio is Tier 1 common capital divided by Basel I risk-weighted assets. Tier 1 common capital is defined as Tier 1 capital less elements of Tier 1 capital not in the form of common equity, such as perpetual preferred stock, noncontrolling interests in subsidiaries, and trust preferred securities. In July 2013, the U.S. Federal Reserve approved the final rule for implementing Basel III in the United States. For further information on Basel I and Basel III, see Regulatory capital on pages 117-119 and 42-45 of JPMorgan Chase& Co.’s Annual Report on Form 10-K for the year ended December 31, 2012, and Quarterly Report on Form 10-Q for the quarter ended March 31, 2013, respectively.
5. In Consumer & Community Banking, supplemental information is provided for Card Services to enable comparability with prior periods. The change in net income is presented excluding the change in the allowance, which assumes a tax rate of 38%. The net charge-off rate and 30+ day delinquency rate presented include loans held-for-sale.
6. In addition to reviewing JPMorgan Chase's net interest income on a managed basis, management also reviews core net interest income to assess the performance of its core lending, investing (including asset-liability management) and deposit-raising activities (which excludes the impact of Corporate & Investment Bank's ("CIB") market-based activities). The core net interest data presented are non-GAAP financial measures due to the exclusion of CIB"s market-based net interest income and the related assets. Management believes this exclusion provides investors and analysts a more meaningful measure by which to analyze the non-market-related business trends of the Firm and provides a comparable measure to other financial institutions that are primarily focused on core lending, investing and deposit-raising activities.
7. CIB provides several non-GAAP financial measures which exclude the impact of DVA. These measures are used by management to assess the underlying performance of the business. The ratio for the allowance for loan losses to period-end loans is calculated excluding the impact of trade finance loans and consolidated Firm-administered multi-seller conduits, to provide a more meaningful assessment of CIB’s allowance coverage ratio.
Additional notes on financial measures 8. Headcount-related expense includes salary and benefits (excluding performance-based incentives), and other noncompensation costs related to employees.
9. Pretax margin represents income before income tax expense divided by total net revenue, which is, in management’s view, a comprehensive measure of pretax
performance derived by measuring earnings after all costs are taken into consideration. It is, therefore, another basis that management uses to evaluate the performance of Asset Management against the performance of its respective peers.
Notes
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Forward-looking statements
This presentation contains forward-looking statements within the meaning of the Private Securities
Litigation Reform Act of 1995. These statements are based on the current beliefs and expectations
of JPMorgan Chase & Co.’s management and are subject to significant risks and uncertainties.
Actual results may differ from those set forth in the forward-looking statements. Factors that could
cause JPMorgan Chase & Co.’s actual results to differ materially from those described in the
forward-looking statements can be found in JPMorgan Chase & Co.’s Annual Report on Form 10-K
for the year ended December 31, 2012, and Quarterly Report on Form 10-Q for the quarter ended
March 31, 2013, which have been filed with the Securities and Exchange Commission and are
available on JPMorgan Chase & Co.’s website (http://investor.shareholder.com/jpmorganchase),
and on the Securities and Exchange Commission’s website (www.sec.gov). JPMorgan Chase &
Co. does not undertake to update the forward-looking statements to reflect the impact of
circumstances or events that may arise after the date of the forward-looking statements.
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